Have you recently moved in with your significant other or are you planning to do so?
If so, you’re entering a high-stakes game.
Like in most high-stakes games, things could go your way. If that happens, the payoff could be huge. You could, as they say, live happily ever after.
But if things don’t go well, that’s when things could start to get messy.
I asked my colleague and family lawyer: Laurence Klass from Watson Goepel to help shed some light on Cohabitation Agreements. The rest of this article is what he had to say.
Breakups are never pleasant, and unfortunately, that’s when disputes can get nasty. Most people don’t think that it will ever get to that point with someone they love, but sadly, breakups are when they see an entirely new side to the person.
I’ve seen this happen plenty of times. Two people, let’s say both of them divorced and with kids, fall in love and move in together. After a while, the relationship starts to fall apart.
Each of them brought different things they shared…but now the question of who brought what isn’t quite as clear. And as things start to unravel, the issues begin to emerge…
Who keeps the dog?
What are our kids entitled to?
What do we do with the property we bought during the time we were together?
Typically, answering these questions is tough, and becomes the center of a legal dispute.
Other times, when people have the foresight (and good advice from a lawyer), they sign a cohabitation agreement, making separations much easier.
WHAT IS A COHABITATION AGREEMENT?
Much like a marriage contract or a prenuptial agreement, a cohabitation agreement is a legal document signed by two people who live together or are planning to move into the same home.
Cohabs, as this written agreement is sometimes called, outline how things will be divided if the relationship were to end.
This includes who:
retains ownership of property purchased together
retains ownership of property acquired before the relationship started
takes responsibility for any debt accrued before or during the relationship
pays for household expenses; and
how inheritance would be divided if families are being combined
In British Columbia, as long as the terms are deemed fair and don’t infringe on anyone’s individual freedoms (like, for example, specifying who a person can or can’t talk to), these cohabitation agreements can be pretty wide-ranging.
DO I NEED A COHABITATION AGREEMENT?
Generally speaking, yes having one makes sense. If you are planning to move in with your partner it is a good idea to do so before you move in. However, if you are already living with your partner it is more important to have this agreement written and signed before two years of living together. After two years you are considered to be in a common-law relationship which is considered the same as a marriage-like relationship under BC Family Law.
If you are getting married or plan to, your cohab agreement can be worded in a way to ensure that it will still remain in force once you are married. It also gives you a chance to come to an agreement on how things will get divided while you are still in the relationship (and on good terms with your partner).
Having a cohab reduces some of the stress during breakups and helps avoid the costs involved with disputes. They also help make sure that both parties take care of their families and protect the inheritance that they give or receive from their own family members.
By having a cohabitation agreement, you are resolving in advance how to separate property if the relationship breaks down. Everything is much quicker, cost-effective, and less stressful.
In short, you can move on quicker with your life.
WHAT HAPPENS IF YOU DON’T HAVE ONE?
In BC, if a couple doesn’t have a cohabitation agreement and a dispute ensues after their relationship breaks down, the decision as to who gets what will be governed by the Family Law Act.
According to this act, property and debt is divided equally among both parties. It becomes the responsibility of each person to provide evidence proving who brought what into the relationship, which is sometimes difficult to do.
The time to have these agreements made is when people are on good terms. If you wait and the couple isn’t on good terms, lawyers get involved, and that can get pricey and could take years.
DO YOU NEED ONE IF YOU ARE MARRIED?
Under British Columbian law, cohabitation agreements hold the same power as a marriage contract (in fact, they are the exact same thing, except named differently).
These agreements apply to anyone in a married couple, a common law partnership, or who is living together. They can even include clauses that say that they remain valid if the status of the relationship transitions from cohabitation to a common law relationship to being legally married.
WHAT DO YOU NEED TO INCLUDE IN A COHABITATION AGREEMENT?
Here is a list of things that can be included in a cohabitation agreement:
How family property or an individual person’s property, like real estate, possessions, and pensions, will be divided
How shared debts will be divided
The agreement can also determine who gets what if the relationship were to end. This includes:
who owns what within the party’s assets
how much money each person puts in to run the household
how credit cards are dealt with
whether someone will receive spousal support (typically in the form of financial support) upon an eventual breakup
how any disagreements following separation will be solved
WHAT IS NOT INCLUDED?
In BC, certain things cannot be included in a cohabitation agreement.
Laying out how people must act within the relationship
Stating parental responsibilities for children who have not been born.
Laying out future child support obligations for any unborn children.
DO YOU NEED TO UPDATE COHABITATION AGREEMENTS?
Cohabitation agreements should be seen as a living document. They need to be reviewed at regular intervals to keep them current and make sure they still do what they are meant to.
We recommend that people update their cohabitation agreement every five years, or whenever a significant event, such as a marriage or the birth of a child, occurs. Additionally, if one of the members of the agreement were to suddenly receive a large sum of money or property from an inheritance, for instance, the agreement should also be reviewed.
If you would like to make sure that this update occurs at regular intervals, you can include a review clause in the document itself. This clause would be triggered after an event (such as the ones mentioned above) or could state that the agreement needs to be reviewed every couple of years to remain valid.
Whatever you choose to do, the main point is that it’s important to look at the agreement regularly to make sure it continues to work for both parties and to make sure that it hasn’t become significantly unfair.
HOW DO YOU GET A COHABITATION AGREEMENT?
There is a growing trend of people who choose to try to save money by using resources online to create their own cohabitation agreements.
While an online template gives the appearance of saving time and money, this is just not true.
There are plenty of precedents of people who have entrusted their property and significant debts to these online templates, only to find out that they hold no legal value, causing their assets to be divided according to the Family Law Act.
If you want your cohabitation agreement to stand up in court, you need a lawyer who knows family law and can tailor it to fit your specific needs. Both parties should also seek independent legal advice to make sure the agreement is fair and gives adequate coverage to their own best interests.
If you have any more questions about Cohabitation or Marriage Agreements, let me know and I’ll put you in touch with a family lawyer who can assist.
A big thanks to Lawrence Klass for this great information!
That might have felt like a lot of information. Here is a summary of all the key points we went over for you to reference.
Cohabitation Agreement Definition
A cohabitation agreement is a legal document signed by two parties who live together or plan to move into the same home. It outlines how assets, debts, and other matters will be divided in the event the relationship ends.
Purpose of Cohabitation Agreements
Cohab agreements are essential to protect you legally and to avoid disputes and complications if your relationship ends. They provide clarity on ownership of property, responsibility for debts, household expenses, and inheritance division.
Legal Consequences Without a Cohabitation Agreement
In the absence of a cohabitation agreement, the shared property and debt are divided equally among both parties according to the Family Law Act. Proving ownership of assets can become challenging and lead to prolonged legal battles. Under the law, unmarried couples in a common law relationship (living together for at least 2 years) are treated as having a marriage-like relationship.
Applicability to Married Couples
Cohabitation agreements have the same power as marriage contracts in British Columbia and apply to married couples, common law partnerships, and couples living together.
What to Include in a Cohabitation Agreement
A cohab agreement can cover the division of family and individual property, shared debts, spousal support, and dispute resolution methods.
Inclusions Not Allowed in Cohab Agreements
Certain aspects, such as dictating behavior within the relationship, parental responsibilities for unborn children, and future child support obligations for unborn children, cannot be included in a cohabitation agreement.
Need for Regular Updates
Cohabitation agreements should be considered living documents and should be reviewed regularly, especially after significant events like marriage, the birth of a child, or changes in financial circumstances.
Importance of Professional Legal Assistance
Using online templates for your cohabitation agreement may not be legally valid. It is advisable to consult a lawyer who can tailor the agreement to specific needs and ensure it holds up in court. Both parties should seek independent legal counsel to ensure fairness and adequate coverage of their interests.